Hi all,
Revisiting this - I have enough liquid cash to withdraw cash from each account ($6,000) to cover the over-contribution. Now, in regards to the gains from the excess contribution, I can either liquidate shares to cash or I can have shares moved over into a non-retirement brokerage account that are worth that same amount. Tax is paid either way.
I need a sanity check here...is there any tax difference between moving the excess gain over in cash or in stock? Let's say I have an excess gain of $1,000 as an easy example. I'm better off selling the stock and getting taxed on the $1k alone, as opposed to moving over $1k of stock, paying tax on it, then eventually selling and paying tax on that gain as well, am I correct? Or is there no difference? It seems to me that I take the theoretical gain on the sale while it's still in the Roth, as opposed to moving to brokerage and then doing it to avoid double taxation.
Scenario A ($1,000 worth of stock bought at $800) - sell in the Roth IRA, and pay tax on $1,000 upon move to brokerage.
Scenario B ($1,000 worth of stock nought at $800) - move shares to brokerage, pay tax on $1,000, then upon eventual sale (let's say the price stays the same), I pay gain on sale on the $200 gain.
Scenario A seems better to me, but maybe there is something I'm missing that makes these the same. Thanks!